Glossary
What is a token?
In one sentence
A token is a crypto asset created on top of an existing blockchain, rather than being the blockchain's own native currency.
The distinction is between a coin and a token. A coin is native to its chain — ether on Ethereum, bitcoin on Bitcoin — and is what you pay fees in. A token is created by a smart contract running on that chain, and thousands can exist on the same network.
Because creating a token requires only deploying a standard contract, it is trivial and nearly free. That is worth internalising: the existence of a token implies no funding, no team, no product and no legitimacy. Someone can create a convincing-looking token in minutes.
Tokens serve various purposes — governance rights, access to a service, a claim on revenue, or a representation of some other asset. Many have no mechanism connecting the token’s value to the project’s success at all, which is a question worth asking before buying one.
For example
You need ETH to move an Ethereum token, because fees are always paid in the chain's native coin.